I’m a software guy. While I am more than comfortable rooting and flashing a custom ROM onto my wife’s Galaxy S III, I need help setting up a printer. Lucky for me, my career’s arc also coincided with the rise of software.

Back when I graduated university oh so many moons ago, software was literally rocket science. I entered the industry at the cusp of the transition from the mainframe/minicomputer eras to the client/server era. When I started coding at a Wall Street firm in the early 1990s, software was controlled by “men in white coats” in the mainframe room. I use to send jobs to CICS via JCL (not a Java class library for anyone under 40) and had to wait for approval, then for execution time. Software was complex to build, expensive to produce, and had way too many moving parts. In short, software sucked and only NASA and big banks invested in custom software development.

Lucky for me, that quickly changed and the client/server era, followed by the .COM era liberated millions of software developers like me. The last twenty years have seen a revolution in the ease of building software and the economics of software development, changing the lives of just about everyone on the planet. Software’s liberation from the men in white coats in the Mainframe room has made entrepreneurship far easier (and cheaper) as I have described here.

Over the past few months I have realized something, just as I thought that the software revolution was only catching its stride after 20 years of liberation, I noticed that everyone around me was building something physical. Maybe this is because I live in Hong Kong and the high tech manufacturing center of the world is a 30 minute train ride away in Shenzhen, China. Or maybe it is because my mentor is obsessed with 3-D printers and has had a 3-D printer the size of a washing machine in his basement for a decade. But no, something else is happening: Hardware is the New Software.

My eyes started to open on a day trip to Shenzhen earlier this year to the Huaqiangbei Electronics market. My friend who brought me to the market made it sound like a giant Frys or even Best Buy, however, what I encountered was astonishing. This is how I describe Huaqiangbei to people: imagine the largest shopping mall you have ever seen. Picture it filled with just a single component of motherboards. Then picture an identical one next to it containing just the internals of a USB port. Then picture an identical one next to it filled with just WiFi radios. Then one for cell phone screens, wires, LED displays, etc, etc. The place is enormous and supports the supply chain of the large contract manufacturers in Shenzhen, like Foxconn building your iPad.

The side effects of the radical growth of consumer electronics and its suppliers ecosystem are huge. Hardware has gotten cheaper and componentized. Hardware has been liberated!

Earlier this week, I was judging the Imagine Cup, an international software competition for university students. After well over 200 teams from 75 countries was narrowed down to six finalists, here was the breakdown:

3 teams were a hardware solution that was supported by custom software that they wrote

1 team was a software solution that had a Kinect component to it as well

1 team was a pure software solution

Five out of the six teams incorporated hardware, and four of those built their own hardware! For a software competition! By students!

Just as software was once hard to build and expensive to prototype years ago, as recently as three years ago, hardware was difficult and expensive. Just as software was liberated 20 years ago, hardware has been liberated, thanks to componentized supply chains, the economies of scale, and open hardware facilitation co-work spaces in many cities such as Dim Sum Labs here in Hong Kong and SEED Studio in Shenzhen. Now just about anyone can rapidly and cheaply prototype their hardware solution and seek a first production run by an eager factory in the developing world funded by putting the prototype up on Kickstarter. The DIY (do it yourself) revolution has begun!

The software revolution changed the world in some pretty dramatic ways. The hardware revolution will be even more dramatic.

The Imagine Cup is a worldwide software design student competition sponsored by Microsoft. Students are given a theme at the beginning of the school year and form teams in their university to build a project that is they can bring to market. The competition is about business viability as much as using the latest super cool technology. So students have to be the right blend of entrepreneur and geek. The competition has students compete in regional competitions and then have to win the right to represent their country in the worldwide finals. Last year the winner was “Team Hermes” from Ireland and they went on to start a business based on the project. The Imagine Cup is truly a transformative thing for those who participate.

This year there are 350 finalists from 75 countries on 106 teams. The finals start today in Sydney, Australia, and I am lucky enough to be one of the 56 judges evaluating the teams. I spent the afternoon Friday at the venue with the teams and fellow judges and attended the opening ceremony and am equally excited as the students. I’m even more excited since I was a judge at the first ever Imagine Cup ten years ago in Barcelona, Spain.

The first Imagine Cup was a truly inspirational event. The excitement of the students was amazing. Since the Imagine Cup was very small back then (only 15 finalists), it was held the day before TechEd Europe, so the students attended TechEd as well. I got to know them well during the week at TechEd and always wonder how many of them stuck with entrepreneurism. I always look back and say that Imagine Cup 2003 was the single most rewarding community event I have ever volunteered for.

In the past 10 years a total of 1.65 million students have participated from 194 countries. I wonder how big it will be 10 years from now (and if they will ask me to be a judge again. )

I’m very lucky to have the opportunity to talk with entrepreneurs all the time. There are tons of brand new startups here in Hong Kong and around the world. Entrepreneurs take me out for coffee all the time to pick my brain and seek advice.

Many founders mock up a few screen shots, cobble together a proof of concept, go to town in PowerPoint, then have lots of meetings with people like me asking: “do you like my idea?” and “how do I get money?”

As I said last week on this blog, the economics of a startup have changed, yet again. Since it takes less and less money these days to get a venture off the ground, my advice has been consistent to new entrepreneurs: don’t spend any time in the early stages looking for money.

Startup founders who spend most of their time meeting people and looking for money before they write a single line of code are wasting their time. This is precious time that could be used building a prototype and then going out and validating that prototype with potential customers. What Steve Blank famously calls “Get the hell out of the building” and doing Customer Validation. We all know that almost all startups go through the proverbial “pivot” and the faster we get there, the better.

Alternatively, if the startup got money right away, we all know what would happen, they would be nose down building their product and trying to sell it. The problem of course is that the idea would not be properly vetted and validated. It would take longer to “get out of the building” and eventually pivot, wasting your investors money in the process.

My advice is to scrimp, save, work nights and weekends, give away sweat equity and don’t go for any seed funding until well after your second or third prototype was validated by potential customers. Once you’ve done that, you’ll find that funding is much easier to obtain anyway.

While speaking on a panel last week at the BizSpark European Entrepreneurship conference in London, I mentioned how in 1999 we raised $36m of Venture Capital at Zagat in order to get from idea (expressed in PowerPoint) to paying customers. I asserted that back then in the stone ages, you had to: buy lots of servers (usually at overcapacity if you had some peak and valleys in traffic), hire lots of expensive people, and spend a ton on marketing to reach the masses.

Then I asserted that how those numbers started to change due to the cloud and the infrastructure around it (Skype, outsourcing, etc). I talked briefly how I started a successful company in 2002 for only $300k of investment and another in 2007 for only $100k of investment. I also recently invested in a company where the total raise was only about $25k and in less than six months went from idea to revenue generating customers.

The panel moderator, David Rowan (Editor, Wired UK), then asked another panelist, Bernard Dalle a longtime VC from Index Ventures, if his fund is seeing a slowdown in investment. He mentioned his recent investments in Path and Flipboard raised millions of dollars. Is there a disconnect between what Bernard and I said?

Another panelist, Rob Fraser, CTO of Microsoft, mentioned how the cloud does change everything. Rob, Bernard, and I went on to explain that you still need to spend a lot of money, but the big, game changing difference is that you don’t need to spend it all up front.

At Zagat in late 1999, I spent well over a million dollars on infrastructure (server farm, switches, priority based load balancer, etc, etc) in order to be able to “scale” when we hit the millions and millions of users when we launched a few months later. As I “scaled” from 100 simultaneous users to 1000 simultaneous to 5000 simultaneous users over the course of a few months, I was still running on the multi-million dollar infrastructure. Since we had a spike in traffic at lunch and dinner times (go figure) and after Super Bowl ads, etc, we had to have a large server farm. It took us a year to start adding more servers to the farm to accommodate the nearly billion monthly unique page views.

Contrast this with today’s startup economics. Today everything is cheaper and better. You can augment your staff with programmers in far away places and keep in touch via Skype, etc. But most importantly, with the cloud, you only have to pay as you go with the server infrastructure.

In order to get started today, it is virtually free. Just sign up with one of the incubator programs at AWS or Azure and you are ready to go live. Once you grow out of the simple startup incubator phase (and you will pretty quickly), you start to pay only for the bandwidth/compute cycles that you need (and can peak and valley as you like.) You can start out with only a few thousand dollars and slowly increase your infrastructure spending over time as you grow.

Our point on the panel is that you may well wind up spending the same amount of money as I did in 1999, but not all at once, most likely over the course of several years. This drastically changes the economics of startups: you no longer need to go to VCs for lots of money in order to get from idea to customers. Now you can get to idea to at least beta testers on your own dime (or a small amount of Angel Investment) and go to the VCs later on. If you never get to that later stage, you never would have had to spend that $20-$36m in VC.

On Monday Joel and I will be doing Agile Estimation at TechEd in Orlando . It is loosely based on my recent Pluralsight course, however, Pluralsight won’t let me make fun of Joel, while TechEd does. I have attached the slides below, however, we plan on using Excel as our main presentation tool. (If you have not seen this before, it is fun.)

We’re agile, so we don’t have to estimate and have no deadlines, right? Wrong! This session reviews the problem with estimation in projects today and then provides an overview of the concept of agile estimation and the notion of re-estimation. Learn about user stories, story points, team velocity, how to apply them all to estimation and iterative re-estimation. We take a look at the cone of uncertainty and how to use it to your advantage. We then take a look at the tools we will use for Agile Estimation, including planning poker, Team Foundation Server, and much more. We then take an alternative approach and look at using real metrics to limit the guesswork in estimating and still run a team that produces predictably and reliably. This is a very interactive session, so bring a lot of questions!

On Monday, Mark Zuckerberg showed up to pre-IPO roadshow investor meetings wearing his signature hoodie. Wedbush Securities managing director Michael Pachter commented on Bloomberg news yesterday that Zuckerberg should show the investment community some respect by ditching the hoodie in investor meetings and wearing it is a sign of immaturity.

"Mark and his signature hoodie: He’s actually showing investors he doesn’t care that much; he’s going to be him. I think that’s a mark of immaturity. I think that he has to realize he’s bringing investors in as a new constituency right now, and I think he’s got to show them the respect that they deserve because he’s asking them for their money."

As a guy who proudly wears jeans and tee shirts to formal events, you would expect me to attack Pachter as well. While I don’t completely agree with Pachter, he does have a point.

Founders represent the heart and soul of a company. They set the company culture and lead by example. The problem with founders is that they sometimes forget that their company has grown up and they are still acting like the company is a small upstart. This disconnect between the company’s size and maturity and the founder’s attitude and behaviors can cause problems, sometimes major ones.

As startups start to mature, their founders have to mature along with it. As the company moves from startup to challenger, to market leader, the founder has to make adjustments along the way. Behaviors and policies that were appropriate for a small startup may not be appropriate for a company that is public.

For example when Bill Gates rallied the troops by saying that they were going to “cut off Netscape’s air supply”, Bill was guilty of acting like Microsoft was the tiny underdog when in reality it was a huge publically traded market leader and Netscape was the tiny upstart. Gates’ comment became a major piece of evidence in Microsoft’s anti-trust trial.

I’ve made this mistake many times as well. Zagat went through several phases while I was CTO in the dot com boom and my playful behavior that worked so well in the pre-IPO/VC dot com environment of late 1999 did not go over well in the post-crash/layoff environment of 2001. We had brought in a new CEO after the dot com crash and my enthusiasm was misinterpreted by the CEO as not being serious. Unfortunately this reflected poorly on the entire IT staff. I was guilty of forgetting that the company had changed and it was time to keep the same spirit but change some tactics and behaviors. Once I did, things picked up nicely.

Founders also make the mistake of thinking like a startup when larger company decisions are needed. For example, it took Microsoft something like 20 years to buy a corporate jet, Google and Facebook had to get sued to start acquiring patents, and Yahoo! turned down a lucrative offer from Microsoft since they still thought of themselves as a Silicon Valley rebel instead of the blue chip big media company in the trouble it was in.

At Telerik, our founders have had to make adjustments over the years. When I met them Telerik was a scrappy 30 person company. Now we have teams that are larger than that and over 600 people worldwide. The founders have scaled and adjusted their behavior accordingly, all while keeping true to themselves and the company culture. They wear jeans and tee shirts to the office, collared shirts to board meetings, and suits and ties when accepting the Red Herring 100 award.

I’m not saying the Mark Zuckerberg should ditch the hoodie and wear a suit to work everyday. However, he should realize that going public requires some behavioral changes, not just in financial accounting, but also in his leadership style.

The techie rebel in me applauds Zuckerberg for standing up the the man and wearing his hoodie on Monday. The experienced MBA side of me also cringes knowing that Zuckerberg is bound to make several Bill Gates style mistakes, mistakes that could cost Facebook dearly.

The topic will be about exits: IPOs, mergers and acquisitions, liquidity events, and the like. We’ll talk about the process of an exit, how a deal is structured, as well as how the money side of it all works (including earn-outs, stock payments, and incentive payments.) Should make for a fun evening!

While I expect this to be predominately Q&A based, here are the slides:

I’ve worked in communications at a large company for longer than I’d like to publically admit. During that time I have supported many different facets of the business, yet the communication challenges seem to be very consistent. No matter how much information you try to provide there are always two camps – the “you must be holding some information back” camp and the “I don’t have time to read this” camp.

As a divisional or departmental communicator you are competing with the corporate messaging – intranets, memos from leadership, electronic newsletters, messages from HR, internal blogs, message boards and …well you get my drift. How do you prevent your leader’s voice from getting lost in the shuffle? Now throw in the global perspective of language, culture and time zones. And the icing on the cake was when I supported manufacturing where more than half of the audience did not have a dedicated pc.

Basically as a communicator you are always competing - competing with the employees’ time and interest, competing with how the external media skews your internal news, competing with the internal message blogs where employees get to rip apart your messaging.

Readers are fickle – especially the younger workforce. If you don’t grab them in the beginning, tell it to them straight and answer the WIIFM then you’ve lost them. I’ve read somewhere that communications is one of the most stressful jobs – right up there with air traffic controllers. Scary thought, eh? Maybe I’ll try that on for size when I retire.

A few quick tips:

Communicate when there is new information - be timely

Don’t hide behind corporate jargon

Mix it up – experiment with different communication vehicles

Open the door – let the audience respond and seek out if the messages resonate

So why do we even bother, other than the fact that most of us are a bit quirky and we enjoy the insaneness of the job . Because knowing that each day you have answered someone’s question, pointed them in the right direction, clarified an issue and increased transparency then you can go home thinking, I guess I can do this all over again tomorrow.